Sunday, September 9, 2012

Carlyle Group's Virginia Incursion to Extend to Beach?

The Carlyle Group's PEU brigade overran coal-fired power plants in Portsmouth and Hopewell.  They have their beady eyes on Virginia's port operations.  Will they continue their march to the coast? 

The Cavalier Hotel, a prime Virginia Beach property, is up for grabs.  Gene Dixon, Jr. lost a family lawsuit and his business empire will be dismantled.  The story of Gene Dixon, Sr.'s purchase of the Cavalier Hotel is Farmville legend.  After being refused a stay for his plain dress, Gene Sr. bought the Cavalier Hotel.

Gene Jr. plans to appeal the court decision so Carlyle might have time to consider a bid for the Cavalier.  However, Carlyle's going full press for Virginia's ports.

By Oct. 15, the state intends to announce which proposal is preferred or whether VIT should remain in control. They expect to sign a deal by the end of the year, essentially rushing to finalize an agreement before legislators return to Richmond and intervene.

Virginia's privatization scheme ensures difficulty in making apples to apples comparisons.  There is no RFP for interested firms to respond to in making their offers.  This opens the door for political influence in selecting a private partner for the state's public assets. 

Virginia inked a deal with GEICO to sponsor its rest areas for "safe cell phone use."  Never mind that most people stop in rest areas to relieve themselves.  Will people see or hear GEICO adds while going to the bathroom?

Virginia's other public-private partnership will build HOV lanes on I-95 in Northern Virginia.  The federal government will provide $300 million in financing through TIFIA so 95 Express Lanes can make $5-6 per rush hour commute. 

Circling around, federal TIFIA money can be used for ports.  How might Carlyle lever TIFIA funds in its run on Virginia ports?

Today's TIFIA Interest Rate 2.74% for a 35-year loan as of Thursday, September 6, 2012

PEU's love government funds and state-provided, tax-exempt franchises from Virginia's "mountains, to the prairies, to the oceans, white with foam..."

Update 9-10-12:  Daily Press reported the state hired four consulting firms to help analyze and sell the deal.   They include KPMG, Drewry Maritime Advisors, PFM, Rubin Communications, Powell Tate and an Old Dominion University economist.  I'm not sure what poly-consultancy will add to Virginia's cluster PPP.